Alibaba is buying an interest in more bricks to complement its billions of clicks.
The web giant said Monday it would acquire 36.2 percent of Chinese hypermarket Sun Art Retail for $2.88 billion with an eye toward helping the retailer digitize its business.
The investment is part of a strategic alliance Alibaba is forming with Chinese retailers Auchan Retail and Ruentex Group. Alibaba is buying its stake in Sun Art from Ruentex, which will still hold 4.7 percent of the firm, and Auchan will boost its stake in Sun Art to 36.2 percent.
Alibaba has been investing in retail to better know and connect with consumers, capturing data and engaging them, for instance through payments, while they’re shopping in physical stores.
Daniel Zhang, Alibaba’s chief executive officer, said the partnership would help “redefine traditional retail through digital transformation.”
It could also help give Alibaba’s New Retail initiative more of an international slant since Auchan has operations in 17 countries.
Zhang said, “Going forward, we will explore various opportunities together with Auchan and try to improve our services in [overseas] markets.”
Alibaba, which is known primarily for its massive online marketplace business, has a growing number of other brick-and-mortar initiatives in the works. The effort was on display during Singles’ Day, which drove $25.3 billion in sales and sought to bring more stores into the shopping celebration.
The company launched Hema, a digitized physical supermarket chain in 2015 and this year purchased an 18 percent stake in Hong Kong-listed Lianhua Supermarket and helped take department store chain Intime private.
Last month, at the WWD CEO Summit, Alibaba president Michael Evans said: “New Retail is something we do today and we’ll be doing a lot more of in the future. It’s a very exciting part of our business. Some of our competitors appear ready to kill the off-line retailer. We don’t want to, we want to support the off-line retailer and integrate it with online activities. Look at a market like China where 15 percent of total retail is online, that means 85 percent is off-line. We’re interested in the 85 percent of the growth opportunity in addition to the 15 percent. The merchants love it because they’re working with all the data that is incredibly valuable in deciding how they’re spending their marketing and advertising dollars. The other side is the consumer side: they want to shop online and off-line. Young people still want to go to the mall. People are not going to do all things online. It’s true in the U.S. and it’s also true in China. So they need to be integrated.”